Iridium Reports financial 3Q 2021 Results and Updates its 2021 outlook

MCLEAN, Va. – October 19, 2021 – Iridium Communications Inc. (Nasdaq: IRDM)  today reported financial results for the third quarter of 2021 and updated its full-year 2021 outlook. Net loss was US$ 2.1 million, or $0.02 per diluted share, for the third quarter of 2021, as compared to net loss of US$ 4.0 million, or $0.03 per diluted share, for the third quarter of 2020.

This decrease in net loss was primarily the result of operating profit improvements and lower net interest expenses. Operational EBITDA (“OEBITDA”)for the third quarter was a record breaking $100.2 million, as compared to US$ 93.4 million for the prior-year period, representing a year-over-year increase of 7% and an OEBITDA margin of 62%.  OEBITDA benefitted from increases in revenue across the board.

Iridium reported third-quarter total revenue of $162.2 million, which consisted of US$127.8 million of service revenue and $34.4 million of revenue related to equipment sales and engineering and support projects. Total revenue increased 7% versus the comparable period of 2020, while service revenue grew by 9%. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 79% of total revenue for the third quarter of 2021.

The company ended the quarter with 1,690,000 total billable subscribers, which compares to 1,429,000 for the year-ago period and is up from 1,616,000 for the quarter ended June 30, 2021. Total billable subscribers grew 18% year-over-year, driven by growth in commercial IoT customers.

“We feel really good about the momentum we’re seeing in our business. It’s broad-based and a function of strong top line growth, good execution and strong partner activity. Together, these factors provide Iridium a clear runway for long-term growth,” said Matt Desch, CEO, Iridium. Desch continued, “With the flood of new capital making its way into the space industry, Iridium continues to distinguish itself as a leader in satellite communications by leveraging its unique network and spectrum position to connect people, vehicles and assets on the move. We continue to generate stronger free cash flow as we attract new subscribers to our network, which sets us up well as we plan for 2022.”

Commenting on its full-year outlook, Desch added, “In light of strong underlying demand and continued subscriber momentum, Iridium is raising its full-year guidance for 2021. We now expect total service revenue growth of between 5% and 6% and operational EBITDA of approximately US$ 375 million this year.”

Iridium Business Highlights

Service – Commercial

Commercial service remained the largest part of Iridium’s business, representing 63% of the Company’s total revenue during the third quarter. The company’s commercial customer base is diverse and includes markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation and emergency services. These customers rely on Iridium’s products and services as critical to their daily operations and integral to their communications and business infrastructure.

  • Commercial service revenue was $101.9 million, up 11% from last year’s comparable period due to an increase in revenue from IoT, voice and data, and broadband services.
  • Commercial voice and data subscribers were up 6% from the year-ago period to 372,000 subscribers. Commercial voice and data average revenue per user (“ARPU”) remained steady at $41 during the third quarter.
  • Commercial IoT data subscribers grew 25% from the year-ago period to 1,156,000 customers, driven by continued strength in consumer personal communications and other IoT applications. Commercial IoT data ARPU was $8.93 in the third quarter, compared to $9.48 in last year’s comparable period, resulting from a growing proportion of personal communications subscribers utilizing lower ARPU plans. This effect was offset somewhat by increased usage by aviation subscribers given the increase in air traffic from last year’s third quarter.
  • Commercial broadband revenue was $11.5 million, up from $9.1 million in the year-ago period. This rise was primarily attributable to ongoing adoption of Iridium Certus® broadband service. Commercial broadband average revenue per user (“ARPU”) was $299 during the third quarter, compared to $270 in last year’s comparable period.
  • Iridium’s commercial business ended the quarter with 1,541,000 billable subscribers, which compares to 1,287,000 for the year-ago period and is up from 1,463,000 for the quarter ended June 30, 2021. IoT data subscribers represented 75% of billable commercial subscribers at the end of the quarter, an increase from 72% at the end of the prior-year period.
  • Hosted payload and other data service revenue was $14.6 million in the third quarter compared to $14.5 million in the prior-year period.

Service – Government

Iridium’s voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.

Under the Enhanced Mobile Satellite Services contract (the “EMSS Contract”), a seven-year, $738.5 million fixed-price airtime contract with the U.S. Air Force Space Command signed in September 2019, Iridium provides specified satellite airtime services, including unlimited global standard and secure voice, paging, fax, Short Burst Data®, Iridium Burst®, RUDICS and Distributed Tactical Communications System services for an unlimited number of Department of Defense and other federal government subscribers. Iridium also provides maintenance and support work for the U.S. government’s dedicated Iridium gateway under two other contracts with the U.S. Air Force Space Command. Iridium Certus airtime services are not included under these contracts and may be procured separately for an additional fee.

  • Government service revenue was $25.9 million in the third quarter compared to $25.1 million in the prior-year period, reflecting the impact of a contractual step-up in the EMSS Contract on September 15.
  • Iridium’s government business ended the quarter with 149,000 subscribers, which compares to 142,000 for the year-ago period and is down from 153,000 for the quarter ended June 30, 2021. Government voice and data subscribers increased 7% from the year-ago period to 65,000 as of September 30, 2021. Government IoT data subscribers increased 4% year-over-year to 84,000 and represented 56% of total government subscribers.

Equipment

  • Equipment revenue was $26.9 million during the third quarter, compared to $25.1 million in the prior-year quarter. The company now expects equipment revenue to be greater this year than in 2020.

Engineering & Support

  • Engineering and support revenue was $7.5 million during the third quarter, compared to $9.4 million in the prior-year quarter, primarily due to the episodic nature of contract work.

Capital expenditures were $8.8 million for the third quarter, which includes $0.4 million of capitalized interest. The Company ended the third quarter with gross debt of $1.63 billion and a cash, cash equivalents and marketable securities balance of $289.0 million, for a net debt balance of $1.34 billion.

During the quarter ended September 30, 2021, the company repurchased approximately 72,000 shares of its common stock under its previously announced $300 million share repurchase program at a total purchase price of $2.6 million. As of September 30, 2021, $174.9 million remained available and authorized for repurchase under this program.

2021 Outlook

The Company updated its full-year 2021 outlook for total service revenue and OEBITDA and currently anticipates:

  • Total service revenue growth of between 5% and 6% for full-year 2021 (previous outlook was for total service revenue growth of between 4% and 5%). Total service revenue for 2020 was $463.1 million.
  • Full-year 2021 OEBITDA of approximately $375 million (previous outlook was for OEBITDA of between $365 million and $375 million). OEBITDA for 2020 was $355.6 million.
  • Negligible cash taxes in 2021. Cash taxes are expected to be negligible through approximately 2023.
  • Net leverage of below 3.5 times OEBITDA at the end of 2022, assuming $300.0 million in share repurchases. Net leverage was 3.6 times OEBITDA at September 30, 2021.